Lloyd’s agencies eager to embrace ILS

Lloyd’s agencies want insurance-linked securities (ILS) as a permanent re/insurance market fixture, according to a survey by the Lloyd’s Market Association (LMA).

From all Lloyd’s managing agents who participated in the survey, 80 percent would “like to see ILS products become a permanent fixture in the re/insurance market”.

The LMA polled senior executives from 25 managing agencies. More than two thirds see a potential use for the new UK ILS framework in the next 12 months, 60 percent would like to see Lloyd’s Central Fund diversify its sources of capital through ILS, and 100 percent believe ILS transactions will widen to cover more risks, including cyber and legacy business, in the next three years.

The survey also shows that 88 percent of respondents would like to see London leverage its underwriting expertise to gain access to currently uninsured risks using ILS capital. Around 36 percent of respondents believe Lloyd’s framework will need to change to accommodate more use of ILS.

“This research shows that market participants are extremely supportive of increasing the use of ILS generally, and doing so at Lloyd’s in particular,” said Ken Curtis, LMA director of finance and risk. “The new UK framework has already been tested by a Lloyd’s syndicate, and the market will explore ways to make future transactions even simpler and more efficient.”

SCOR has become the first reinsurer to use the new UK ILS regime to issue a catastrophe bond in June 2018.